Marketing Management Chapter 5: Marketing Research and Information

Chapter 5: Summary

This chapter explored the search for information about the customer and the market. This constitutes the listening part of the marketing dialogue. Marketing research is also needed to assist managers in the decision-making process and to analyze organizational performance. To be viable, however, the benefits derived from marketing research need to exceed the cost of conducting such research.

A systematic research approach will lead to the development of a Market Information System (MIS) that contains information both internal and external to the firm. Important internal data sources are performance analyses, sales reports and employees’ ongoing experience. The more data the intelligence system receives and the more precisely the system can process the available data, the better it can serve the manager. It is therefore important to develop ways of entering nonnumerical reports, such as accounts from a sales conversation or information about customer interests. New technology can enable an MIS to alter communication and decision structures within a firm but also requires careful planning of information distribution and retention.

External information can be derived from either secondary or primary data. Secondary data, collected in response to someone else’s questions, are obtained through desk research and are available quickly and at a low cost. Main sources of secondary data are internal databases, libraries, directories, newsletters, commercial information providers, trade associations, and electronic information services. To ensure their usefulness, the researcher must determine the quality of the data source, the quality of the actual data, and the compatibility of the data with information requirements. Primary data are collected directly on behalf of a specific research project. Typical ways of obtaining such data are through syndicated research—such as retail audits, panel research, or omnibus surveys—and custom research.

The first step of primary marketing research is to clearly define the objectives to ensure the usefulness of the research. Next, the research level needs to be decided. Exploratory research helps mainly in identifying problems, descriptive research provides information about existing market phenomena, and causal research sheds light on the relationships between market factors. The research approach then determines whether qualitative or quantitative data will be collected. Observation, in-depth interviews, and focus groups are primary techniques to yield qualitative data, which may be very insightful but are not fully generalizable and cannot be analyzed statistically. Quantitative data overcome these problems but require the systematic collection of large numbers of data. Experimentation and survey research are the primary research tools. Good survey research must concentrate on question design and structure to elicit useful responses. Data can then be collected by mail (postal mail or e-mail), by using online applications e.g. SurveryMonkey, by telephone, or in-person after an appropriate sample frame is constructed. The data need to be analyzed with appropriate techniques to make the data set comprehensible, insightful, and useful for management. This usefulness is at the heart of the research report, which in essence is a communication process persuading recipients to use the information.

Global Business: Trade, Broken Down

In business, trade is a big word. Not in the sense of how you spell it, but rather how we use it, as there are many compartments to trading with different countries. From exports, to labor, to production and prices, trade isn’t just the exchanging of goods. Lets break it down and use the example of clothing.

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Too much Information for Germans and Americans

By Michael Czinkota

The intelligence communities on both sides of the Atlantic (and probably the Pacific too) are reeling. Major accusations are levied about the inappropriateness and possibly even illegality of their data collection efforts. Going far beyond the Edward Snowden revelations, the claim is about systematic industrial espionage, with data scooping far in excess needed for the battle against terrorism. German chancellor Merkel Germany is accused of either having approved industrial espionage assistance provided to the U.S. by the German Federal Information Service, or of not having kept up with such assistance practices by Germany’s secret trolls.

The accusations do not differentiate between the collection of information and the subsequent usage of the information. Information gathering is akin to panning for gold. One does not know what is there until one has it. Here can be indications, impressions, rumors, suggestions – but what matters in the end is what one actually has in hand.

Once information is available, the question becomes what to do with it. Here it is important to remember the purpose and rationale for the collection process, which can cover issues ranging from nuclear non-proliferation to safeguarding against terrorism, or tracking of potential attacks. There is temptation to think of secondary uses for new knowledge, particularly when it could be worth hard percentage points on the competitiveness scale, such as new insights on hydraulics, or new genetic understandings of agricultural production.

Such possible collateral data benefits, which were not (or should not have been) part of the original collection plan, represent high temptation for abuse, and can lead to an abyss of distrust. Once discovered there is psychic distancing between governments, and growing legal uncertainty for firms who have received and used information. What may appear like a good deal now, may, in future lay the foundation for massive punitive payments which could lead to ruin.

New heydays for attorneys and notaries follow as well, since all sides want to be protected. Transactions slow down and become more expensive because counsel needs to be consulted and more participants provide input, for a price. Clandestine information inflow makes collaboration more difficult and reduces the ability to develop far reaching visions. One can’t always attribute new insights to late night eureka moments.

Just because something can be done does not mean that it should be done. Particularly in the international realm it is important, just as it was centuries ago, to be known as an Honorable Merchant whom others can trust and join in collaboration.

On the German-American information collection side there are few problems: Reinhard Gehlen, Germany’s spy chief of last century’s fame, writes in his memoirs in the late 1960’s about the permanent U.S. right to collect data in Germany. Even without any agreement, such sharing of insights is still reasonable today.

An analysis of the use of collected data (or lack thereof) can benefit from German literature. Franz Kafka’s “The Trial” shows how non-transparent information in the hands of public authority can diminish humanity. Max Frisch in his “Arsonists” explains the danger from evildoers who are not restrained in their actions. Unless society is sensitive to these issues, otherwise, Frisch concludes, the house will burn.

Using information obtained for sovereign protective purposes to enhance corporate competitive advantage, is wrong. Doing so, distorts market signals to investors, producers and customers. These signals provide free nations with economic superiority, capabilities and innovation. Those who manage information on terrorists have no advantage in providing information to businesses.

Government actions can push firms in directions which they would not have taken, to everybody’s detriment. We have seen such distortions for computer chips in the past, and in solar technology at present.

We live in an era of transition. Entirely new ways for information collection and use are becoming possible. We all have to learn to understand new conditions and expectations. The economic dimension is important but not the only dimension leading to societal and individual content. Those that collect, use, and distribute data must clarify their purpose at least internally, already early on obtain insights from data use specialists, and attain agreement on collaboration and then stick to the plan. Otherwise the benefits which look good now will come back to haunt us all later. The German and American governments and firms deserve better.

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This has been published in the Sri Lankan Guardian.

Prof. Czinkota (czinkotm@georgetown.edu) teaches international business and trade at Georgetown University’s McDonough School of Business in Washington D.C. He served as Deputy Assistant Secretary for Trade Information and Analysis in the U.S. Department of Commerce during the Ronald Reagan Administration

There Is Sunshine Above the Clouds (Part 9)

Part 9: Increasing University Appeal.

Universities have a special role to play in the development of new methods and measuring instruments. The focus on providing students and society with a special tool kit which allows others to better evaluate, understand and cope with similarities and differences will be crucial. Important is also the selection of information that firms need to know. In an era where information overload replaces information scarcity, it must become the task of universities to enable others to maximize their learning with a paucity of materials.

Universities need to demonstrate the benefits they can offer. When one considers the expansion and influence of the Roman Empire, it turns out that force played only a small role. Rather, by offering market places, roads, language, laws, and linkages, the Romans provided efficiency, safety, consistency, communication and insights within their realm.  Outsiders then were not forced to join, but did so because affiliation offered the opportunity to live a better life. Universities need to achieve such voluntary interest as well. Given their knowledge base, their human talent and their cross-disciplinary capabilities, universities need to make the cost of non-collaboration unreasonably high to firms, so that they become a sought after source and partner.

This post is part of a series by Michael Czinkota of Georgetown University and Andreas Pinkwart of Handelshochschule Leipzig on international business research and the new role of universities. Find Part 8 here.